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Obama Plans to Expand Overtime Pay

By Christopher Coble, Esq. on June 24, 2015 1:57 PM

How many hours a week do your employees work? 40? 50? 60? Do they get overtime pay?

Most salaried workers do not get overtime pay, but President Obama may be looking to fix that. Since last year, the President ordered the Labor Department to implement new rules to expand overtime pay for millions of workers.

Reports speculate that the Labor Department will announce its new proposed rule soon.

Overtime Pay

The Fair Labor Standards Act (FLSA) regulates the minimum wage, child labor, and much more. Among its many provisions, the FLSA gives the federal government the power to regulate overtime pay.

As it stands now, the law requires that workers be paid overtime pay if they work more than 40 hours per week. However, there are exemptions from this rule. Executive, administrative, and professional salaried workers are not generally not entitled to overtime pay. We may think of secretaries, CEO,s and CFOs when we think of "executive, administrative, and professional." However, the definition of that categorization actually covers any worker who earns more than $455 per week.

The $455 threshold was set in 2004 by the George W. Bush administration. While details on the actual plan are scarce, reports speculate that the President will want to raise the threshold to somewhere between $550 and $970 to keep up with inflation.

If the proposal goes through, millions of workers who make more than $455 but less than the new threshold level per week will be eligible for overtime pay.

Resistance

Unsurprisingly, many Republicans are unhappy with the proposal. Some believe that a higher threshold will destroy jobs and end businesses. House Speaker John A. Boehner claims that the new policy will cause employers to cut hours and make it harder for people to find employment.

However, California has set its overtime pay threshold at $640 and New York has set its threshold at $600 per week. The caps in both states are set to rise to $800 and $675, respectively, in 2016. The sky hasn't fallen. The world hasn't ended. There hasn't been mass firings and surging unemployment caused by the higher limits yet.

If and when President Obama's overtime pay proposal does go into effect, consult with an experienced business attorney to ensure that your business is complying with the law.

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